Oh Good - Today's Grim Economic News Is Even Worse Than First Thought

Everyone is £1,500 worse off than they would have been and there are "precious few signs of a recovery"
Liam McBurney - PA Images via Getty Images

People are £1,500 worse off than they would otherwise have been thanks to a collapse in living standards, a new analysis has shown.

It comes after official figures confirmed the UK fell into a recession at the end of last year.

The Office for National Statistics said gross domestic product (GDP) shrunk in the three months to December.

With the economy also contracting between June and September, it means the UK is officially in recession.

It is a huge blow to Rishi Sunak who - with the general election just months away - made growing the economy one of his key pledges to voters.

But according to the Resolution Foundation, today’s grim figures are actually even worse than they look.

While the economy overall shrank by 0.3% in the final quarter of 2023, GDP per capita fell by a staggering 0.7% across the whole of last year.

The economics think-tank said that meant families had experienced a “far deeper living standards downturn” since early 2022 than the headline data showed.

It means GDP per capita is now 4.2% below its pre-cost of living crisis path, which is equivalent to a loss of nearly £1,500 per person.

James Smith, research director at the Resolution Foundation, said the UK was “a stagnation nation” with “precious few signs of a recovery”.

“Britain has fallen into recession, and a far deeper living standards downturn. Even this weak data is flattered by a rising population,” he said.

“After accounting for population growth, the UK economy hasn’t grown since early 2022, and fallen far behind its pre-cost of living crisis path, with an equivalent loss of around £1,500 per person.”


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